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Presentation of Key Findings Danae Kyriakopoulou , Chief Economist & Director of Research, OMFIF
Introducing Global Public Investors
Total global public assets rise across all institution types, by a joint $1.4tn Assets under management of GPI 750, by institution type, $tn
But overall figures mask regional variation Assets under management of GPI 750, by region, $tn
Equity market downturn takes toll on GPI asset values Source: Thomson Reuters Datastream, OMFIF analysis
..as equities have gained prominence in portfolios Portfolio composition among GPIs covered by Estimated GPIs’ portfolio allocation by asset class, $ tn OMFIF asset allocation analysis, % of AUM 18 16 0.3 0.4 0.3 14 0.5 0.2 1.4 0.5 12 4.6 0.3 1.3 10 0.9 1.3 0.6 0.5 8 0.2 0.5 0.6 6 9.1 3.5 4 8.1 0.6 2 2.0 0 Pension funds Central banks Sovereign funds Government bonds Corporate bonds Equities Real estate Infrastructure Cash Gold Private Equity Other
This has been partly motivated by low yield on traditional assets ‘How has the extremely low level of yields on traditional reserves assets in recent years affected your decision making?’, % of responses
GPIs with high equity allocations even see reserves decline
However looking ahead GPIs still plan to expand investments in equities, esp. CBs ‘In the next 12 -24 months do you plan to increase, reduce or maintain your allocation to the following asset classes?’, % of responses
Equity impact partly offset by continued global economic recovery boosting valuations of other assets Source: IMF, OMFIF analysis
Real assets performing especially strongly, making the asset class popular with GPIs ‘How have your real assets performed relative to ‘What is the motivation for investing in real assets?’, other investments?’ average importance score where 5=very important
However, asset class also relatively inaccessible limiting prospects for future investments ‘Are you allowed to invest in real assets?’ (LHS) ‘Would you consider investing in real assets if laws and regulations allowed you to?’ (RHS)
Strength in dollar also supports foreign reserves Source: Thomson Reuters Datastream, OMFIF analysis
Global Investment imbalances rise to record levels Net international investment positions, $tn
Mixed responses to China – West strengthening investment screening mechanisms Largest recipients of Chinese investment EU member states with FDI screening mechanisms 2005-18, $bn EU member states without US: 179.9 FDI screening mechanisms Australia: 94.5 UK: 80.8 Switzerland: 60.9 Brazil: 57 Canada: 53.6 Germany: 41.2 Singapore: 33 Russia: 29.2 France: 25.5
Mixed responses to China – some central banks ramping up gold purchases as renminbi emerges as dollar challenger ‘How do you see the role of the renminbi as a reserve Central bank gold purchases among top-10 buyers, currency developing and how will you respond?’, January 2014-May 2019, tonnes share of responses 70% 60% 50% 40% 30% 59% 20% 31% 10% 3% 6% 0% 0% Its role will Its role will Other Neither its role Its role will increase as will increase but we nor our stance decrease our involvement will not become will change more involved Source: World Gold Council, OMFIF analysis
Looking ahead, central banks are coping with new challenges ‘What do you think are the top three considerations on the way your reserves are managed in the future?’, % of responses
Central banks looking to the future (1): Growing importance of communications Most-followed central banks on Twitter, by Number of central banks with active Twitter accounts number of followers
Central banks looking to the future (2): Addressing climate risks ‘In the next 12 -24 months do you plan to increase, reduce or maintain your allocation to the following asset classes?’, % of responses
Central banks looking to the future (3): Keeping up with technology
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